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Southwest Faces $140 Million Penalty for Last Year’s Operational Meltdown

Katie Seemann's image
Katie Seemann
Katie Seemann's image

Katie Seemann

Senior Content Contributor and News Editor

Countries Visited: 28U.S. States Visited: 29

Katie has been in the points and miles game since 2015 and started her own blog in 2016. She’s been freelance writing since then and her work has been featured in publications like Travel + Leisure, F...
Edited by: Juan Ruiz
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Juan Ruiz

Compliance Editor & Content Contributor

Countries Visited: 40U.S. States Visited: 27

Juan has been involved in credit cards, loyalty, travel, and personal finance for more than 10 years. He has worked for several outlets including The Points Guy and Forbes and was previously Editor-in...

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Do you remember when Southwest Airlines had a total operational meltdown last year around the holidays? The Department of Transportation hasn’t forgotten, and it just announced a $140 million civil penalty against Southwest.

As a result, there’s now a new customer-friendly policy for passengers who are delayed for 3 hours or more.

Here are the details.

Southwest Fined $140 Million

The Department of Transportation (DOT) just announced a $140 million civil penalty against Southwest Airlines for its epic 2022 operational meltdown.

If you don’t remember, last year, Southwest had some operational failures that led to almost 17,000 canceled flights and over 2 million stranded passengers (myself included) over the holidays. Southwest’s antiquated computer systems were a major factor in the meltdown.

Southwest Airplanes at CMH
Image Credit: Katie Seemann

After a thorough investigation, DOT found that Southwest Airlines violated consumer protection laws in multiple ways.

  • Failed to provide adequate customer service assistance.
  • Failed to provide timely flight status notifications.
  • Failed to provide prompt refunds.

Southwest Airlines has already paid over $600 million in customer refunds, reimbursements, and passenger compensation. This new $140 million penalty is over 30 times larger than any previous consumer protection violation issued by DOT and will bring the amount paid by Southwest as a result of this meltdown to over $750 million.

“Today’s action sets a new precedent and sends a clear message: if airlines fail their passengers, we will use the full extent of our authority to hold them accountable. Taking care of passengers is not just the right thing to do — it’s required, and this penalty should put all airlines on notice to take every step possible to ensure that a meltdown like this never happens again.”

Pete Buttigieg, U.S. Transportation Secretary

A New Policy Adds Additional Compensation for Delayed Passengers

In addition to the $140 million penalty, the DOT requires Southwest to set up a fund with $90 million in vouchers to compensate customers for future delays and cancelations.

If a Southwest passenger arrives at their destination 3 hours or more after their scheduled arrival time for a reason that is in Southwest’s control, that passenger will be entitled to a transferrable $75 voucher for future travel.

This is in addition to any rebooked flights, hotel accommodations, and meal vouchers to which the customer may be entitled.

Bottom Line:

Southwest was ordered by the DOT to pay a $140 million penalty as a result of last year’s operational meltdown. In addition, Southwest must set up a $90 million fund to provide $75 travel vouchers in the future to customers who are delayed for 3 hours or more for reasons that are in Southwest’s control. This $75 voucher is in addition to any other compensation the passenger is due.

Final Thoughts

While a monetary penalty for Southwest Airlines doesn’t make up for being stranded over the holidays, missing family events, and long-awaited vacations, it’s nice to see the DOT taking Southwest’s meltdown seriously.

The airline has paid over $600 million in damages and was just ordered to pay an additional $140 million. In addition, and probably more relevant to consumers, the airline was ordered to set aside $90 million in travel vouchers for future issues.

Therefore, if you’re delayed 3 hours or more for a reason that’s in Southwest’s control, you’ll be entitled to a $75 travel voucher.

Katie Seemann's image

About Katie Seemann

Katie has been in the points and miles game since 2015 and started her own blog in 2016. She’s been freelance writing since then and her work has been featured in publications like Travel + Leisure, Forbes Advisor, and Fortune Recommends.

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